HC Deb 18 December 1975 vol 902 cc1623-4
2. Mr. Frank Allaun

asked the Chancellor of the Exchequer what saving he would obtain if tax relief to owner-occupiers were restricted to the standard rate of tax, to mortgages of under £10,000 or £15,000 in Greater London and to those in both these categories.

Mr. Denzil Davies

If tax relief to owner-occupiers were restricted to the basic rate the saving would be approximately £60 million for 1975–76. I am afraid that the information on which to base reliable estimates for the remaining part of the Question is not available.

Mr. Allaun

Will my hon. Friend consult the Secretary of State for the Environment about introducing these limits and transferring a substantial benefit—several hundreds of millions of pounds—to poorer people to help them to overcome their far more serious housing problems, particularly since a 25–year mortgage of £15,000 at 11 per cent. means that those on the standard tax rate get no less than £28,840 in tax relief at present?

Mr. Davies

As my hon. Friend knows, an inquiry into housing finance is being conducted by the Secretary of State for the Environment. Taxation matters wilt be taken into account—not only the subsidy for owner-occupiers, but subsidies to council tenants. It will take some time before that inquiry is completed, but we shall take all these matters into consideration.

Mr. Michael Latham

Is the hon Gentleman aware that the private housing market is closely knit and that to undertake any such suggestion as the hon. Member for Salford, East (Mr. Allaun) has made would have an absolutely disastrous effect on the whole market?

Mr. Davies

These matters will be taken into account during the review of housing finance.

Sir G. Howe

Will the Minister further take into account the fact that 80 per cent. of first-time house buyers buy second-hand houses at the lower end of the market and that any attempt at selective withdrawal of mortgage interest relief at the upper end would only increase demand at the lower end and reduce supply, so shoving up the price that first-time buyers would have to pay? Therefore, would he counsel the Secretary of State for the Environment to reject this kind of suggestion?

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